Replies to This Discussion

Permalink Reply by Bryant Tutas on February 28, 2010 at 2:00pm

Maceo. I believe it depends on who the investor is. They all have their own guidelines. But I would guess any where from 85% to 90% of value NET to lender would be a good rule of thumb.

Permalink Reply by Maceo Reed on February 28, 2010 at 2:54pm

Thanks. I'll post an update when I receive the results. If anyone else has any info to share, I look forward to the input.

Bryant Tutas said:

Maceo. I believe it depends on who the investor is. They all have their own guidelines. But I would guess any where from 85% to 90% of value NET to lender would be a good rule of thumb.

Permalink Reply by Emily S. Knell on March 1, 2010 at 4:22pm

It could go as low as 82% if the property's loan is FHA insured.

This percentage is the Net the bank wants to see including ALL costs, so I'm not stating that the bank will accept 18% under FMV, but rather they'll accept 18% less than FMV including seller costs, commissions and any buyer concessions.

Permalink Reply by R E on March 2, 2010 at 12:30am

As the others point out, it varies by investor and by MI. If the seller has an FHA insured loan, FHA does it's own appraisal and it doesn't allow comps that were sold as distressed (unless there are no other comps). In my area, this made about a 10% increase over an appraisal that takes distressed comps into account (60% of all comps were distressed sales). Of course, the lender for the buyer then does an appraisal and it comes out 10% lower than the FHA appraisal, so the buyers have to pony up more down payment. The buyers have gone through hell for six months and have no discount to compensate for it.

If anyone has successfully fought anFHA appraisal, I'd like to hear of it.

FHA rules for a short sale can be found by googling: HUD MORTGAGEE LETTER 2008-43.

Permalink Reply by Maceo Reed on March 2, 2010 at 1:39pm

Great feedback. We're close to getting an acceptance, so will provide results shortly. Spoke to a rep at BofA who said that they can accept 80-85% net to the bank. Not sure how this plays out with insured as opposed to non insured mortgages, but knowing going into negotiations helps. We intend to close quickly all cash with little or no contingencies, so I wonder if this is part of the analysis as well.